49–006 

109TH CONGRESS REPT. 109–314 " ! HOUSE OF REPRESENTATIVES 2d Session Part 2 

RAIL INFRASTRUCTURE DEVELOPMENT AND EXPANSION 

ACT FOR THE 21ST CENTURY 

FEBRUARY 3, 2006.—Ordered to be printed 

Mr. THOMAS, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

[To accompany H.R. 1631] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 1631) to provide for the financing of high-speed rail infrastructure, and for other purposes, having considered the same, report thereon with an amendment and without recommendation. 

CONTENTS 

Page 

I. Summary and Background .............................................................................. 1 

A. Purpose and Summary ........................................................................ 1 

B. Background and Need for Legislation ................................................ 2 

C. Legislative History .............................................................................. 2 

II. Explanation of the Bill ..................................................................................... 2 

A. Overview of Rules Governing the Issuance of Tax-Exempt and 

Tax-Credit Bonds ............................................................................... 2 

B. Description of Sections 2 and 3 of H.R. 1631 .................................... 6 

III. Votes of the Committee .................................................................................... 10 

IV. Budget Effects of the Bill ................................................................................. 10 

V. Other Matters To Be Discussed Under the Rules of the House ................... 13 

VI. Changes in Existing Law Made by the Bill, as Reported ............................. 14 

The amendment is as follows: 

Strike sections 2 and 3 of the bill and redesignate the succeeding 

sections accordingly. 

I. SUMMARY AND BACKGROUND 

A. PURPOSE AND SUMMARY

The bill, H.R. 1631 (the ‘‘Rail Infrastructure Development and 

Expansion Act for the 21st Century’’), as reported by the Committee on Transportation and Infrastructure, provides for the fiVerDate Aug 31 2005 23:21 Feb 06, 2006 Jkt 049006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR314P2.XXX HR314P2

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nancing of high-speed rail infrastructure, and for other purposes. 

Sections two and three of the reported bill provide for the issuance 

of $12 billion in tax-exempt bonds and $12 billion in tax credit 

bonds to finance high-speed rail infrastructure. The provisions approved by the Committee strike sections two and three of the bill 

as reported by the Committee on Transportation and Infrastructure. 

B. BACKGROUND AND NEED FOR LEGISLATION

Members of Congress have introduced many proposals involving 

the use of tax-exempt bonds and tax-credit bonds to finance various 

activities. The provisions approved by the Committee reflect the 

need for the Committee on Ways and Means to evaluate and address these proposals in a comprehensive fashion. 

C. LEGISLATIVE HISTORY

On April 27, 2005, the Committee on Transportation and Infrastructure favorably reported H.R. 1631 by voice vote. The bill was 

referred to the Committee on Ways and Means on April 14, 2005. 

On February 1, 2006, the Committee on Ways and Means 

marked up the provisions of the bill within its jurisdiction and reported the provisions, as amended, on February 1, 2006, by voice 

vote. 

EXPLANATION OF THE BILL 

A. OVERVIEW OF RULES GOVERNING THE ISSUANCE OF TAX-EXEMPT

AND TAX-CREDIT BONDS

PRESENT LAW

Tax-exempt bonds 

In general 

Interest on debt incurred by States or local governments is excluded from income if the proceeds of the borrowing are used to 

carry out governmental functions of those entities or the debt is repaid with governmental funds. Interest on bonds that nominally 

are issued by States or local governments, but the proceeds of 

which are used (directly or indirectly) by a private person and payment of which is derived from funds of such a private person, is 

taxable unless the purpose of the borrowing is approved specifically 

in the Code or in a non-Code provision of a revenue Act. These 

bonds are called ‘‘private activity bonds.’’ The term ‘‘private person’’

includes the Federal Government and all other individuals and entities other than States or local governments. 

Private activities eligible for financing with tax-exempt private activity bonds 

Present law includes several exceptions permitting States or 

local governments to act as conduits providing tax-exempt financing for private activities. 

States or local governments may issue tax-exempt ‘‘exempt facility bonds’’ to finance property for certain private businesses. Business facilities eligible for this financing include transportation (airVerDate Aug 31 2005 23:21 Feb 06, 2006 Jkt 049006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR314P2.XXX HR314P2

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1 Rev. Proc. 2004–71. 2Sec. 142(a)(11) and sec. 142(i). 

3 A metropolitan statistical area for this purpose is defined by reference to section 143(k)(2)(B). 

Under that provision, the term metropolitan statistical area includes the area defined as such 

by the Secretary of Commerce. 4Sec. 142(i)(2). 

5Sec. 142(i)(3). 

6Sec. 146(g)(4). 

ports, ports, local mass commuting, and high speed intercity rail facilities); privately owned and/or privately operated public works facilities (sewage, solid waste disposal, water, local district heating or 

cooling, and hazardous waste disposal facilities); privately-owned 

and/or operated low-income rental housing; and certain private facilities for the local furnishing of electricity or gas. Bonds issued to 

finance ‘‘environmental enhancements of hydro-electric generating 

facilities,’’ qualified public educational facilities, qualified green 

building and sustainable design projects and qualified highway or 

surface freight transfer facilities also may qualify as exempt facility 

bonds. 

Tax-exempt financing also is authorized for capital expenditures 

for small manufacturing facilities and land and equipment for firsttime farmers, local redevelopment activities, and eligible empowerment zone and enterprise community businesses. Tax-exempt private activity bonds also may be issued to finance limited non-business purposes: certain student loans and mortgage loans for owneroccupied housing. Both capital expenditures and limited working 

capital expenditures of charitable organizations described in section 

501(c)(3) of the Code may be financed with tax-exempt private activity bonds (‘‘qualified 501(c)(3) bonds’’). 

In most cases, the aggregate volume of private activity tax exempt bonds is restricted by annual aggregate volume limits imposed on bonds issued by issuers within each State. For calendar 

year 2005, these annual volume limits, which are indexed for inflation, equal $80 per resident of the State, or $239,180,000 million, 

if greater.1

Exempt facility bonds for high-speed intercity rail facilities 

Private activity bonds can be issued for high-speed intercity rail 

facilities.2 A facility qualifies as a high-speed intercity rail facility 

if it is a facility (other than rolling stock) for fixed guideway rail 

transportation of passengers and their baggage between metropolitan statistical areas.3 The facilities must use vehicles that are reasonably expected to operate at speeds in excess of 150 miles per 

hour between scheduled stops and the facilities must be made 

available to members of the general public as passengers. If the 

bonds are to be issued for a nongovernmental owner of the facility, 

such owner must irrevocably elect not to claim depreciation or credits with respect to the property financed by the net proceeds of the 

issue.4

The Code imposes a special redemption requirement for these 

types of bonds. Any proceeds not used within three years of the 

date of issuance of the bonds must be used within the following six 

months to redeem such bonds.5

Seventy-five percent of the principal amount of the bonds issued 

for high-speed rail facilities is exempt from the volume limit.6 If all 

the property to be financed by the net proceeds of the issue is to 


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7Sec. 103(a) and (b)(2). 

8Sec. 148. 

9Sec. 149(e). 

10Sec. 1397E, sec. 54, and sec. 1400N(1). Clean renewable energy bonds also may be issued 

by a clean renewable energy bond lender, an Indian tribal government, or a cooperative electric 

company. 

be owned by a governmental unit, then such bonds are completely 

exempt from the volume limit. 

Arbitrage and other requirements 

The tax exemption for State and local bonds does not apply to 

any arbitrage bond.7 An arbitrage bond is defined as any bond that 

is part of an issue if any proceeds of the issue are reasonably expected to be used (or intentionally are used) to acquire higher 

yielding investments or to replace funds that are used to acquire 

higher yielding investments.8 In general, arbitrage profits may be 

earned only during specified periods (e.g., defined ‘‘temporary periods’’) before funds are needed for the purpose of the borrowing or 

on specified types of investments (e.g., ‘‘reasonably required reserve 

or replacement funds’’). Subject to limited exceptions, investment 

profits that are earned during these periods or on such investments 

must be rebated to the Federal government. 

An issuer must file with the IRS certain information in order for 

a bond issue to be tax-exempt.9 Generally, this information return 

is required to be filed no later than the 15th day of the second 

month after the close of the calendar quarter in which the bonds 

were issued. 

Tax-credit bonds 

In general 

As an alternative to traditional tax-exempt bonds, the Code permits three types of tax-credit bonds. States and local governments 

have the authority to issue ‘‘qualified zone academy bonds,’’ ‘‘clean 

renewable energy bonds,’’ and ‘‘Gulf tax credit bonds.’’ 10

Qualified zone academy bonds 

‘‘Qualified zone academy bonds’’ are defined as any bond issued 

by a State or local government, provided that (1) at least 95 percent of the proceeds are used for the purpose of renovating, providing equipment to, developing course materials for use at, or 

training teachers and other school personnel in a ‘‘qualified zone 

academy,’’ and (2) private entities have promised to contribute to 

the qualified zone academy certain equipment, technical assistance 

or training, employee services, or other property or services with a 

value equal to at least 10 percent of the bond proceeds. 

A total of $400 million of qualified zone academy bonds is authorized to be issued annually in calendar years 1998 through 2005. 

The $400 million aggregate bond cap is allocated to the States according to their respective populations of individuals below the poverty line. Each State, in turn, allocates the credit authority to 

qualified zone academies within such State. 

Financial institutions that hold qualified zone academy bonds are 

entitled to a nonrefundable tax credit in an amount equal to a credit rate multiplied by the face amount of the bond. A taxpayer holding a qualified zone academy bond on the credit allowance date is 


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entitled to a credit. The credit is includable in gross income (as if 

it were a taxable interest payment on the bond), and may be 

claimed against regular income tax and alternative minimum tax 

liability. 

The Treasury Department sets the credit rate at a rate estimated 

to allow issuance of the qualified zone academy bonds without discount and without interest cost to the issuer. The maximum term 

of the bond is determined by the Treasury Department, so that the 

present value of the obligation to repay the bond was 50 percent 

of the face value of the bond. 

Qualified zone academy bonds are subject to neither arbitrage 

nor spending requirements. Treasury regulations require that the 

proceeds of a qualified zone academy bond be spent with due diligence. Issuers of qualified zone academy bonds are not required to 

file information returns with the Treasury. 

Clean renewable energy bonds 

Clean renewable energy bonds (‘‘CREBs’’) are defined as any 

bond issued by a qualified issuer if, in addition to the requirements 

discussed below, 95 percent or more of the proceeds of such bonds 

are used to finance capital expenditures incurred by qualified borrowers for facilities that qualify for the tax credit under section 45 

(‘‘qualified projects’’ other than Indian coal production facilities), 

without regard to the placed-in-service date requirements of that 

section. There is a national CREB limitation of $800,000,000. 

Bonds must be issued before December 31, 2007. 

Like qualified zone academy bonds, CREBs are not interest-bearing obligations. Rather, the taxpayer holding CREBs on a credit allowance date would be entitled to a tax credit. The amount of the 

credit is determined by multiplying the bond’s credit rate by the 

face amount on the holder’s bond. The credit rate on the bonds is 

determined by the Secretary and is to be a rate that permits 

issuance of CREBs without discount and interest cost to the qualified issuer. The credit accrues quarterly and is includible in gross 

income (as if it were an interest payment on the bond), and can be 

claimed against regular income tax liability and alternative minimum tax liability. 

CREBs are subject to a maximum maturity limitation. The maximum maturity is the term which the Secretary estimates will result in the present value of the obligation to repay the principal on 

a CREBs being equal to 50 percent of the face amount of such 

bond. Moreover, the provision requires level amortization of CREBs 

during the period such bonds are outstanding. 

CREBs also are subject to the arbitrage requirements of section 

148 that apply to traditional tax-exempt bonds. Principles under 

section 148 and the regulations thereunder apply for purposes of 

determining the yield restriction and arbitrage rebate requirements 

applicable to CREBs. 

In addition, to qualify as CREBs, the qualified issuer must reasonably expect to and actually spend 95 percent or more of the proceeds of such bonds on qualified projects within the five-year period 

that begins on the date of issuance. To the extent less than 95 percent of the proceeds are used to finance qualified projects during 

the five-year spending period, bonds will continue to qualify as 

CREBs if unspent proceeds are used within 90 days from the end 


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of such five-year period to redeem any ‘‘nonqualified bonds.’’ The 

five-year spending period may be extended by the Secretary upon 

the qualified issuer’s request demonstrating that the failure to satisfy the five-year requirement is due to reasonable cause and the 

projects will continue to proceed with due diligence. 

Unlike qualified zone academy bonds, issuers of CREBs are required to report issuance to the IRS in a manner similar to the information returns required for tax-exempt bonds. 

Gulf tax credit bonds 

Gulf tax credit bonds may be issued by the States of Louisiana, 

Mississippi, and Alabama. To qualify as Gulf tax credit bonds, 95 

percent or more of the proceeds of such bonds must be used to (i) 

pay principal, interest, or premium on a bond (other than a private 

activity bond) that was outstanding on August 28, 2005, and was 

issued by the State issuing the Gulf tax credit bonds, or any political subdivision thereof, or (ii) make a loan to any political subdivision of such State to pay principal, interest, or premium on a bond 

issued by such political subdivision. In addition, the issuer of Gulf 

tax credit bonds must provide additional funds to pay principal, interest, or premium on outstanding bonds equal to the amount of 

Gulf tax credit bonds issued to repay such outstanding bonds. Gulf 

tax credit bonds must be a general obligation of the issuing State 

and must be designated by the Governor of such State. The maximum maturity on Gulf tax credit bonds is two years. In addition, 

present-law arbitrage rules that restrict the ability of State and 

local governments to invest bond proceeds apply to Gulf tax credit 

bonds. 

Gulf tax credit bonds must be issued in calendar year 2006. The 

maximum amount of Gulf tax credit bonds that may be issued is 

$200 million in the case of Louisiana, $100 million in the case of 

Mississippi, and $50 million in the case of Alabama. Gulf tax credit 

bonds may not be used to pay principal, interest, or premium on 

any bond with respect to which there is any outstanding refunded 

or refunding bond. Moreover, Gulf tax credit bonds may not be 

used to pay principal, interest, or premium on any prior bond if the 

proceeds of such prior bond were used to provide any property described in section 144(c)(6)(B) (i.e., any private or commercial golf 

course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the 

principal purpose of which is the sale of alcoholic beverages for consumption off premises). 

As with CREBs, issuers of Gulf tax credit bonds are required to 

report issuance to the IRS in a manner similar to the information 

returns required for tax-exempt bonds. 

B. DESCRIPTION OF SECTIONS 2 AND 3 OF H.R. 1631 

Selection 2 of H.R. 1631: High-speed rail infrastructure bonds 

Section 2 amends Chapter 261 of Title 49 by adding a new section 26106. This section permits the Secretary of Transportation to 

designate bonds for funding the development of high speed rail in 

the United States. The Secretary of Transportation may designate 

two types of bonds: private-activity bonds, the interest on which is 

exempt from Federal taxes, and tax-credit bonds, for which the govVerDate Aug 31 2005 23:21 Feb 06, 2006 Jkt 049006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR314P2.XXX HR314P2

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ernment provides the holder a credit rather than the issuer paying 

interest to the holder. 

The Secretary of Transportation may designate high-speed rail 

infrastructure bonds if six requirements are met. 

• First, a State, group of States, or compact of States, depending on the circumstances, must be the proposed issuer of 

the bonds. 

• Second, the bonds must finance projects that make a substantial contribution to providing the infrastructure and equipment required to complete a high-speed rail transportation corridor that the Secretary of Transportation determines are part 

of a viable and comprehensive high-speed rail transportation 

corridor design for intercity passenger service. Those projects 

include, but are not limited to, the financing or refinancing of 

equipment and capital improvements, the elimination of grade 

crossings, the development of intermodal facilities, improvement of train speeds or safety, or station rehabilitation and 

construction. Projects for the Alaska Railroad are also qualified 

projects. 

• Third, if the rail corridor includes the use of rights-of-way 

owned by a freight railroad, the State applicant must demonstrate that it has entered into a written agreement with 

such freight railroad regarding the use of the rights-of-way, 

and that collective bargaining agreements with freight railroad 

employees (including terms regarding the contracting of work) 

shall remain in full force and effect. 

• Fourth, the corridor design submitted by the applicant 

must eliminate existing railway-highway grade crossings that 

the Secretary of Transportation determines would impede 

high-speed rail operations. 

• Fifth, the applicant must comply with the existing Amtrak 

prevailing wage standards and the labor protection benefits applicable under section 504 of the Railroad Revitalization and 

Regulatory Reform Act of 1976. 

• Sixth, the applicant must agree not to pay the principal or 

interest on any bonds using funds from the Highway Trust 

Fund, except as permitted by law on the date of enactment. 

The amount of bonds the Secretary of Transportation may designate to be issued in each year is limited to $1.2 billion per year 

from 2006 to 2015 of private activity tax-exempt bonds and $1.2 

billion per year from 2006 to 2015 of tax-credit bonds. Any amount 

that the Secretary of Transportation does not designate in a year 

may be carried over and designated in subsequent years (through 

fiscal year 2019). 

When designating bonds, the Secretary of Transportation is to 

give preference to projects that: (1) are funded through a combination of both tax-exempt and tax-credit bonds; (2) propose to link 

rail passenger service to other passenger transportation modes, 

such as public transportation or air service; (3) are expected to 

have a significant impact on air traffic congestion; (4) are expected 

to improve commuter rail operations; (5) have completed all environmental work and the project is ready to begin construction; or 

(6) have received all financial commitments and other support from 

State and local governments. 


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11 Under present law, section 149(c) of the Code provides that ‘‘no interest on any bond sha1l 

be exempt from taxation under [the Code] unless such interest is exempt from tax under [the 

Code] without regard to any provision of law which is not contained in [the Code] and which 

is not contained in a revenue Act.’’

The Secretary of Transportation is to grant or deny the applicant’s request within nine months after receiving the application. 

The issuer of the bonds is to report annually to the Secretary of 

Transportation. That report must include statements about the 

terms of the outstanding designated bonds and about the progress 

made on the project financed with the bonds. In addition, the bill 

requires the Secretary of Transportation, in consultation with the 

Secretary of the Treasury, to submit to the Congress an annual report including the reports provided by the issuers and an assessment of the progress made toward completion of high-speed rail 

transportation corridors resulting from projects financed with the 

bonds designated. 

Interest on bonds designated by the Secretary of Transportation 

and issued by a State, States, or Compact of States is exempt from 

Federal taxation, notwithstanding section 149(c) of the Code.11 In 

addition, the bill provides that such bonds are exempt from the volume limitation on private activity bonds. 

Bonds designated by the Secretary of Transportation may be 

issued for refinancing projects if certain requirements are met. 

The bill makes entities providing intercity high-speed rail passenger service that use property acquired through bonds designated 

by the Secretary of Transportation subject to rail statutes, such as 

the Railway Labor Act and the Railroad Retirement Act of 1974. 

This rule does not apply to projects for the Alaska Railroad. Any 

entity providing high-speed rail service commencing after the date 

of enactment which replaces another intercity carrier must enter a 

collective bargaining agreement covering employees of the displaced carrier. The agreement must further provide for priority hiring by new entities providing intercity high-speed rail passenger 

service of workers of an incumbent rail passenger provider who are 

displaced because of projects financed by bonds designated by the 

Secretary. The agreement must also establish a process for implementing such hiring priority, pay, work rules and working conditions. A process for negotiating new labor arrangements is also provided by the bill. 

The Secretary of Transportation is to issue implementing regulations within six months after the date of enactment. 

Section 3 of H.R. 1631: Tax Credit to Holders of Qualified HighSpeed Rail Infrastructure Bonds 

Section 3 amends the Code to create the tax-credit bonds that 

the Secretary may designate pursuant to the newly created section 

26106 of Title 49. It also imposes additional requirements on exempt facility bonds for high-speed intercity rail facilities. 

Qualified high-speed rail infrastructure tax-credit bonds 

The bill creates a new type of tax-credit bond, qualified highspeed rail infrastructure bonds. In lieu of interest, the bondholder 

receives a tax credit equal to the applicable credit rate multiplied 

by the outstanding face amount of the bond. The ‘‘credit rate’’ for 

the qualified high-speed rail infrastructure bonds is the rate equal 


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to the average market yield (as of the day before the date of sale 

of the issue) on outstanding long-term corporate debt obligations. 

Credits accrue quarterly and are includable in the gross income of 

the taxpayer. The credit is allowable against regular income tax 

and alternative minimum tax liability. Unused credits may be carried over to succeeding taxable years. Unlike qualified zone academy bonds, any taxpayer would be eligible to be a holder of a qualified high-speed rail infrastructure bond and thereby claim the credit. 

To be a qualified high-speed rail infrastructure bond, five requirements must be met: (1) the issuer must certify that the Secretary of Transportation has designated the bond under the new 

section 26106 of Title 49 for purposes of the tax-credit provision; 

(2) 95 percent or more of the proceeds from the sale of the issue 

are to be used for expenditures incurred after the date of enactment for a qualified project (as defined in the new section 26106 

of Title 49 described above); (3) the term of each bond that is part 

of the issue cannot exceed 20 years; (4) the payment of the principal with respect to such bond is the obligation solely of the issuer; 

and (5) the issue meets certain spending and arbitrage requirements. 

If any qualified high-speed rail infrastructure bond ceases to be 

such a qualified bond, the issuer is required to reimburse the 

Treasury for all tax credits (including interest) that accrued within 

three years of the date of noncompliance. If the issuer fails to make 

a full and timely reimbursement of tax credits, holders of the bonds 

would be liable for any remaining amounts. 

Additional requirements for exempt facility bonds for highspeed intercity rail facilities authorized by section 

142(a)(11) of the Code 

The bill reduces the train speed requirements from 150 miles per 

hour to 110 miles per hour for exempt facility bonds issued for 

high-speed intercity rail. In addition, a bond will not be treated as 

an exempt facility bond for high-speed intercity rail unless such 

bond meets the six requirements described above for high-speed 

rail infrastructure bonds (e.g., designation by the Secretary of 

Transportation, and meets requirements relating to qualified 

projects, rights-of-way agreements, railway-highway grade crossings, prevailing wage standards and labor protection benefits, and 

an agreement not to pay interest or principal using funds derived 

from the Highway Trust Fund except as permitted by law). 

REASONS FOR CHANGE

The Committee notes that there are many proposals to expand 

the use of tax-exempt and tax-credit bonds for various projects. The 

Committee believes that such proposals should be considered by 

the Committee in a comprehensive rather than piece-meal fashion. 

Further, the Committee believes that legislation involving tax-exempt and tax credit bonds, as with any revenue provision, should 

originate in the Ways and Means Committee, after careful consideration by the Committee of such proposals. 


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EXPLANATION OF PROVISION

The Committee strikes sections 2 and 3 of H.R. 1631 from the 

bill. 

III. VOTES OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statements are made concerning the votes of the Committee on Ways and Means in its consideration of the bill, H.R. 1631. 

MOTION TO REPORT THE BILL

The bill, H.R. 1631, as amended, was ordered reported, without 

recommendation, by voice vote (with a quorum being present). 

VOTE ON AMENDMENT

A rollcall vote was conducted on the following amendment: 

An amendment by Chairman Thomas, to strike sections 2 and 3 

of H.R. 1631, as introduced and reported by the Committee on 

Transportation and Infrastructure, was agreed to by a roll call vote 

of 20 yeas to 15 nays. The vote was as follows: 

Representatives Yea Nay Present Representative Yea Nay Present 

Mr. Thomas ........................... X ........... ............. Mr. Rangel ........................... ........... X .............

Mr. Shaw ............................... X ........... ............. Mr. Stark .............................. ........... X .............

Mrs. Johnson ......................... X ........... ............. Mr. Levin .............................. ........... X .............

Mr. Herger ............................. X ........... ............. Mr. Cardin ............................ ........... X .............

Mr. McCrery ........................... ........... ........... ............. Mr. McDermott ..................... ........... X .............

Mr. Camp .............................. X ........... ............. Mr. Lewis (GA) ..................... ........... X .............

Mr. Ramstad ......................... X ........... ............. Mr. Neal ............................... ........... X .............

Mr. Nussle ............................. ........... ........... ............. Mr. McNulty .......................... ........... X .............

Mr. Johnson ........................... X ........... ............. Mr. Jefferson ........................ ........... ........... .............

Mr. English ........................... X ........... ............. Mr. Tanner ............................ ........... X .............

Mr. Hayworth ......................... X ........... ............. Mr. Becerra .......................... ........... X .............

Mr. Weller .............................. ........... ........... ............. Mr. Doggett .......................... ........... X .............

Mr. Hulshof ........................... X ........... ............. Mr. Pomeroy ......................... ........... X .............

Mr. Lewis (KY) ...................... X ........... ............. Ms. Tubbs Jones .................. ........... X .............

Mr. Foley ............................... X ........... ............. Mr. Thompson ...................... ........... X .............

Mr. Brady .............................. X ........... ............. Mr. Larson ............................ ........... X .............

Mr. Reynolds ......................... X ........... ............. Mr. Emanuel ......................... ........... X .............

Mr. Ryan ............................... X ........... .............

Mr. Cantor ............................. X ........... .............

Mr. Linder ............................. X ........... .............

Mr. Beauprez ......................... X ........... .............

Ms. Hart ................................ X ........... .............

Mr. Chocola ........................... X ........... .............

Mr. Nunes ............................. X ........... .............

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d)(2) of the rule XIII of the Rules of 

the House of Representatives, the following statement is made concerning the effects on the budget of the revenue provisions of the 

bill, H.R. 1631 as reported. 

The bill, as reported, is estimated to have the following effects 

on budget receipts for fiscal years 2006–2011: 


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B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES BUDGET AUTHORITY

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that the bill involves no new or increased budget authority. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following statement by CBO is provided. 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, February 3, 2005. 

Hon. WILLIAM ‘‘BILL’’ M. THOMAS, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1631, the Rail Infrastructure Development and Expansion Act for the 21st Century. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CB0 staff contact is Gregory Waring. 

Sincerely, 

DONALD B. MARRON, Acting Director. 

Enclosure. 

H.R. 1631—Rail Infrastructure Development and Expansion Act for 

the 21st Century 

Implementing H.R. 1631 would have no budgetary impact because its provisions were enacted as a part of H.R. 3, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 

for Users (Public Law 109–59). As in that act, H.R. 1631 would authorize the appropriation of $100 million each year over the 2006–

2013 period to provide grants to public agencies for developing 

high-speed-rail corridors and for improving the technology for highspeed-rail systems. Provisions in H.R. 1631 that would expand the 

Railroad Rehabilitation and Improvement Financing program were 

also enacted as a part of Public Law 109–59. 

On May 12, 2005, CBO transmitted a cost estimate for H.R. 1631 

as ordered reported by the House Committee on Transportation 

and Infrastructure on April 27 , 2005. In addition to the provisions 

described above, the Transportation Committee version of the bill 

also would authorize states to issue tax-exempt and tax-credit 

bonds to finance infrastructure for highspeed-rail transportation 

projects. The Joint Committee on Taxation estimated that the bond 

provisions would lower federal revenues, and CBO’s cost estimate 

for that version of the legislation included those estimates. 

Neither version of the legislation contains intergovernmental or 

private-sector mandates as defined by the Unfunded Mandates Reform Act. 

The CBO staff contact for this estimate Gregory Waring. This estimate was approved by Robert A. Sunshine, Assistant Director for 

Budget Analysis. 


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D. MACROECONOMIC IMPACT ANALYSIS

Because the bill as reported does not amend the Internal Revenue Code of 1986, no macroeconomic impact analysis is required 

under clause 3(h)(2) of rule XIII of the Rules of the House of Representatives. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives (relating to oversight findings), the Committee advises that it was a result of the Committee’s oversight review concerning the tax burden on taxpayers that the Committee 

concluded that it is appropriate to report the bill as amended to the 

House of Representatives with no recommendation. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

C. CONSTITUTIONAL AUTHORITY STATEMENT

With respect to clause 3(d)( 1) of rule XIII of the Rules of the 

House of Representatives (relating to Constitutional Authority), the 

Committee states that the Committee’s action in reporting this bill 

is derived from Article I of the Constitution, Section 8 (‘‘The Congress shall have Power To lay and collect Taxes, Duties, Imposts 

and Excises . . .’’), and from the 16th Amendment to the Constitution. 

D. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

E. APPLICABILITY OF HOUSE RULE XXI 5(b) 

(ii) Rule XXI 5(b) of the Rules of the House of Representatives 

provides, in part, that ‘‘A bill or joint resolution, amendment, or 

conference report carrying a Federal income tax rate increase may 

not be considered as passed or agreed to unless so determined by 

a vote of not less than three-fifths of the Members voting, a 

quorum being present.’’ The Committee has carefully reviewed the 

provisions of the bill, and states that the provisions of the bill do 

not involve any Federal income tax rate increases within the meaning of the rule. 


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14 

F. TAX COMPLEXITY ANALYSIS

Section 4022(b) of the Internal Revenue Service Reform and Restructuring Act of 1998 (the ‘‘IRS Reform Act’’) requires the Joint 

Committee on Taxation (in consultation with the Internal Revenue 

Service and the Department of the Treasury) to provide a tax complexity analysis. The complexity analysis is required for all legislation reported by the House Committee on Ways and Means, the 

Senate Committee on Finance, or any committee of conference if 

the legislation includes a provision that directly or indirectly 

amends the Internal Revenue Code and has widespread applicability to individuals or small businesses. 

The staff of the Joint Committee on Taxation has determined 

that a complexity analysis is not required under section 4022(b) of 

the IRS Reform Act because the bill contains no provisions that 

amend the Internal Revenue Code and that have ‘‘widespread applicability’’ to individuals or small businesses. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

TITLE 49, UNITED STATES CODE 

* * * * * * * 

SUBTITLE V—RAIL PROGRAMS 

* * * * * * * 

PART D—HIGH-SPEED RAIL 

CHAPTER 261—HIGH-SPEED RAIL ASSISTANCE 

Sec. 

26101. Corridor development. 

* * * * * * * 

§ 26101. Corridor development 

(a) CORRIDOR DEVELOPMENT ASSISTANCE.—(1) The Secretary may 

provide under this section financial assistance to a public agency 

or group of public agencies for corridor development for up to 50 

percent of the publicly financed costs associated with eligible activities. 

(2) No less than 20 percent of the publicly financed costs associated with eligible activities shall come from State and local sources, 

which State and local sources may not include funds from any Federal program. 

(b) ELIGIBLE ACTIVITIES.—(1) A corridor development activity is 

eligible for financial assistance under subsection (a) if the Secretary determines that it is necessary to establish appropriate engineering, operational, financial, environmental, or socioeconomic 


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15 

projections for the establishment of high-speed rail service in the 

corridor and that it leads toward development of a prudent financial and institutional plan for implementation of specific high-speed 

rail improvements, or if it is an activity described in subparagraph 

(M), or if it is an activity described in subparagraph (M). Eligible 

corridor development activities include— (A) * * * 

* * * * * * * 

(K) preparation of financing plans and prospectuses; 

(L) creation of public/private partnerships; and 

(M) the acquisition of locomotives, rolling stock, track, and 

signal equipment. 

(M) the acquisition of locomotives, rolling stock, track, and 

signal equipment. 

* * * * * * * 

(c) CRITERIA FOR DETERMINING FINANCIAL ASSISTANCE.—Selection by the Secretary of recipients of financial assistance under this 

section shall be based on such criteria as the Secretary considers 

appropriate, including—

(1) * * * 

(2) the extent to which the proposed development focuses on 

systems which will achieve sustained speeds of 125 mph or 

greater; 

* * * * * * * 

ø§ 26104. Authorization of appropriations 

ø(a) FISCAL YEARS 2006 THROUGH 2013.—There are authorized 

to be appropriated to the Secretary—

ø(1) $70,000,000 for carrying out section 26101; and 

ø(2) $30,000,000 for carrying out section 26102, for each of 

the fiscal years 2006 through 2013. 

ø(b) FUNDS TO REMAIN AVAILABLE.—Funds made available under 

this section shall remain available until expended.¿ 

§ 26104. Authorization of appropriations 

(a) FISCAL YEARS 2006 THROUGH 2013.—There are authorized to 

be appropriated to the Secretary— (1) $70,000,000 for carrying out section 26101; and 

(2) $30,000,000 for carrying out section 26102, 

for each of the fiscal years 2006 through 2013. 

(b) FUNDS TO REMAIN AVAILABLE.—Funds made available under 

this section shall remain available until expended. 

* * * * * * * 

RAILROAD REVITALIZATION AND REGULATORY 

REFORM ACT OF 1976 

* * * * * * * 

TITLE I—GENERAL PROVISIONS 

* * * * * * * 


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DEFINITIONS

SEC. 102. As used in this Act, unless the context otherwise indicates, the term—

(1) ‘‘Association’’ means the United States Railway Association; 

* * * * * * * 

ø(7) ‘‘railroad’’ has the meaning given that term in section 

20102 of title 49, United States Code; and¿ 

(7) ‘‘railroad’’ has the meaning given that term in section 

20102 of title 49, United States Code; and 

* * * * * * * 

TITLE V—RAILROAD REHABILITATION AND IMPROVEMENT 

FINANCING 

* * * * * * * 

SEC. 502. DIRECT LOANS AND LOAN GUARANTEES. 

(a) GENERAL AUTHORITY.—The Secretary shall provide direct 

loans and loan guarantees to—

(1) State and local governments; 

(2) interstate compacts consented to by Congress under section 410(a) of the Amtrak Reform and Accountability Act of 

1997 (49 U.S.C. 24101 note); 

(3) government sponsored authorities and corporations; 

(4) railroads; 

(5) joint ventures that include at least one railroad; and 

(6) solely for the purpose of constructing a rail connection between a plant or facility and a second rail carrier, limited option rail freight shippers that own or operate a plant or other 

facility that is served by no more than a single railroad. 

* * * * * * * 

(d) EXTENT OF AUTHORITY.—The aggregate unpaid principal 

amounts of obligations under direct loans and loan guarantees 

made under this section shall not exceed $35,000,000,000 at any 

one time. Of this amount, not less than $7,000,000,000 shall be 

available solely for projects primarily benefiting freight railroads 

other than Class I carriers. The Secretary shall not establish any 

limit on the proportion of the unused amount authorized under this 

subsection that may be used for 1 loan or loan guarantee. The Secretary shall not establish any limit on the proportion of the unused 

amount authorized under this subsection that may be used for 1 

loan or loan guarantee. 

* * * * * * * 

(f) INFRASTRUCTURE PARTNERS.—

(1) * * * 

(2) CREDIT RISK PREMIUM AMOUNT.—The Secretary shall determine the amount required for credit risk premiums under 

this subsection on the basis of— (A) the circumstances of the applicant, including the 

amount of collateral offered, if any, if any; 

* * * * * * * 

(D) consultation with the Congressional Budget Office; 


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(E) the size and characteristics of the cohort of which the 

loan or loan guarantee is a member; and 

ø(E)¿ (F) the size and characteristics of the cohort of 

which the loan or loan guarantee is a member; and 

(F) any other factors the Secretary considers relevant. 

* * * * * * * 

(4) COHORTS OF LOANS.—In order to maintain sufficient balances of credit risk premiums to adequately protect the Federal Government from risk of default, while minimizing the 

length of time the Government retains possession of those balances, the Secretary shall establish cohorts of loans. When all 

obligations attached to a cohort of loans have been satisfied, 

credit risk premiums paid for the cohort, and interest accrued 

thereon, which were not used to mitigate losses shall be returned to the original source on a pro rata basis. A cohort may 

include loans and loan guarantees. The Secretary shall not establish any limit on the proportion of a cohort that may be 

used for 1 loan or loan guarantee. A cohort may include loans 

and loan guarantees. The Secretary shall not establish any 

limit on the proportion of a cohort that may be used for 1 loan 

or loan guarantee. 

* * * * * * * 

(h) CONDITIONS OF ASSISTANCE.—(1) The Secretary shall, before 

granting assistance under this section, require the applicant to 

agree to such terms and conditions as are sufficient, in the judgment of the Secretary, to ensure that, as long as any principal or 

interest is due and payable on such obligation, the applicant, and 

any railroad or railroad partner for whose benefit the assistance is 

intended—

(A) * * * 

* * * * * * * 

The Secretary shall not require an applicant for a direct loan or 

loan guarantee under this section to provide collateral. The Secretary shall not require that an applicant for a direct loan or loan 

guarantee under this section have previously sought the financial 

assistance requested from another source. The Secretary shall require recipients of direct loans or loan guarantees under this section 

to apply the standards of section 26106(a)(5) of title 49, United 

States Code, to their projects. 

* * * * * * * 

(i) TIME LIMIT FOR APPROVAL OR DISAPPROVAL.—Not later than 

90 days after receiving a complete application for a direct loan or 

loan guarantee under this section, the Secretary shall approve or 

disapprove the application. 

(j) REPAYMENT SCHEDULES.—

(1) IN GENERAL.—The Secretary shall establish a repayment 

schedule requiring payments to commence not later than the 

sixth anniversary date of the original loan disbursement. 

(2) ACCRUAL.—Interest shall accrue as of the date of disbursement, and shall be amortized over the remaining term of 

the loan beginning at the time the payments begin. 

(i) TIME LIMIT FOR APPROVAL OR DISAPPROVAL.—Not later than 

90 days after receiving a complete application for a direct loan or 


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loan guarantee under this section, the Secretary shall approve or 

disapprove the application. 

SEC. 503. ADMINISTRATION OF DIRECT LOANS AND LOAN GUARANTEES. 

(a) * * * 

* * * * * * * 

(l) FEES AND CHARGES.—Except as provided in this title, the Secretary may not assess any fees, including user fees, or charges in 

connection with a direct loan or loan guarantee provided under section 502. 

(l) FEES AND CHARGES.—Except as provided in this title, the Secretary may not assess any fees, including user fees, or charges in 

connection with a direct loan or loan guarantee provided under section 502. 

* * * * * * * 

Æ 


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